Full text of H.16 Capital Market Developments : March 29, 1956
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Not f o r Publication DECONTROLLED AFTER SIX MONTHS H.lU March 29, 1956 CAPITAL MARKET DEVELOPMENTS Two l a r g e corporate security issues with proceeds of £55 million and two S t a t e and l o c a l bond issues t o t a l i n g $13 mill i o n were sold publicly during the week ending March 22. This week corporate i s s u e s t o t a l i n g $120 million and S t a t e and l o c a l i s s u e s of $5h million are scheduled f o r o f f e r i n g . The volume of large public o f f e r i n g s l a s t week was considerably smaller than had been expected. The $100 million Tide Water Associated Oil Company debenture which had been expected was .postponed u n t i l t h i s week and reduced in s i z e t o $50 m i l l i o n , r e portedly due to disagreement between the company and the underwriters as t o the i n t e r e s t r a t e required. The remaining $50 million w i l l be obtained through a term l o a n . . In the S t a t e and l o c a l government market, Key West, Florida r e j e c t e d the only bid on a ' <£9*5 million revenue bond i s s u e , in p a r t because of the i n t e r e s t cost involved. Bond y i e l d s - Yields on a l l types of outstanding bonds increased l a s t week, the r i s e being from 1 to U basis p o i n t s . A f t e r declining e a r l i e r i n the year, y i e l d s began to increase in l a t e February and by l a s t week were at about the same.level as at the end of 1955. There are some d i f f e r e n c e s as between types of bonds however, U . S . Government y i e l d s being somewhat above, and other y i e l d s somewhat below t h e i r year-end l e v e l . Stock p r i c e s l a s t week i n continued 265 common stocks rose Daily indexes i n d i c a t e Wednesday of t h i s week - Common stock p r i c e s increased f u r t h e r heavy t r a d i n g volume. The SEC index of 2.U points to a l e v e l of 288.L on March 23. some decline i n p r i c e s on balance through in smaller trading volume• More d e t a i l e d information concerning recent market developments i s presented i n the attached, e x h i b i t s . Business Finance and Capital Markets Section, Division of Research and S t a t i s t i c s , Board of Governors of the Federal Reserve System. EXHIBIT A H I G H - G R A D E BOND YIELDS Weekly V V 1953 1954 1955 U. S» Govt., long-term 2/ Corporate Aaa 1/ 1953 -• High Low 195U - High Low 1955 - High 1956 - High February 2U March 2 March 9 . March 16 March 23 3.U2 2.99 3.09 2.85 3.17 2.91 3-11* 3-07 (6/19) (1/9) (1/8) (U/23) (12/23) (1/7) (1/6) (3/2) 3-07 3-07 3.08 3-10 3-12 Old series New series 1956 Spread between U. S. Govt. State and local govt. (old series) and Corporate State and Aaa 3/ Aaa local Aaa 3.15 2.78 2.7U 2.UU 2.91 2.62 2.90 2.80 (6/6) n.a. (12/26) n.a. (1/9) n.a. (8/7) n.a. (8/5) 3.03 (8/5) (1/7) 2.89 (6/10) (1/6) 2.99 (3/23) (2/17) 2.92 (2/3) 2.3b 2.05 2.29 2.17 2.83 2.8U 2.86 2.89 2.93 2.91* 2.9U 2.96 2.97 2.99 2.17 2.18 2.18 2.25 2.27 1/ Weekly average of daily figures. 2.73 (6/25) 1.98 (1/8) 2.21 (6/10) 1.90 (9/2) (9/8) (5/26) (1/5) (2/23) • 38 .19 .13 • 32 • 3U .13 .28 .19 • 2U •23 .22 .21 • 19 .81 • 30 .61 .29 .70 :S .56 .66 .66 .68 .6U .66 Average terra of bonds included i s 25-26 2/ Weekly averages of daily figures. The old series includes f u l l y taxable, marketable 2 1/2 per cent bonds due or f i r s t callable a f t e r 12 years through September 1955, and those due or callable in 10-12 years thereafter; the average term to f i r s t c a l l of the bonds included declined from 1U years in early 1953 to 11 1/2 years in early 1956. The new series i s comprised of the 3 per cent bond of 1995 and the 3 1/U per cent bond of 1978-833/ Thursday figures. Only general,obligation bonds are included; average term Ts 20 years. Note.—Highs and lows are for individual series and may be on d i f f e r e n t dates for different series. EXHIBIT B LOWER - GRADE BOND YIELDS 1953 Date 1954 Corporate Baa 1 / 1955 S t a t e and l o c a l govt. Baa 2 / 1956 S t a t e and l o c a l govt, rev. 3/ (Per cent) 1956 - High Low 3.89 3-50 3.7k 3-44 3.63 3.45 3.62 3.58 February 24 March 2 March 9 March 16 March 23 3.58 3.58 3.58 3.59 3.60 1953 - High Low 1954 - High Low 1955 - High (9/18) (1/2) (1/6) (12/31) (12/30) (1/14) (1/6) (3/9) 3.79 2.96 3-32 2.93 3.26 3.02 3.26 3.20 3-20 3.20 3.20 3.23 3.26 (6/25) (1/8) (1/7) (8/5) (12/29) (1/6) (3/22) (3/8) 3.27 2.71 3.00 2.72 2.99 2.76 2.98 2.89 (6/26) (3/2) (1/1) (8/13) ( 1 2 / 30) (1/7) (3/23) (2/24) 2.89 2.90 2.91 2.96 • 2.98 1 / Weekly average of d a i l y f i g u r e s . Average term of bonds included i s 25-26 y e a r s . 2 / Thursday f i g u r e s . Only general o b l i g a t i o n bonds are included; average term i s 20 y e a r s . 3 / Friday f i g u r e s . Average r a t i n g of bonds included i s between Baa and A; average term i s 20 y e a r s . Note.—Highs and lows are f o r i n d i v i d u a l s e r i e s and may be on d i f f e r e n t dates f o r d i f f e r e n t s e r i e s . EXHIBIT C STOCK MARKET x i Stock price index 1 / Trading Common volume 2/ (millions yields 3/ of shares) (per cent) Stock market customer c r e d i t Customers' debit bal- loans to ances hf "others" 5/ (Millions of dollars) 1953 - High 195U - High 1955 - High 1956 - High JanuaryFebruary March 9 March 16 March 23 167.1 1UU.0 221.H 156.5 270.7 217.U 288.h 257.5 (1/2) (9/18) (12/31) (1/6) (12/30) (1/1L) (3/23) (1/20) 262.8 266.3 279.1, 286.0 288. h 2.5 0.9 3-7 l.U h.6 . 1.5 3.1 . 2.0 2.2 "2.3 2.6 3.1 = 2.8 5.75 5.15 5-33 It.20 ii.22 3.78 L.08 3.93 2,W5 • 2,055 3A36 2,1*05 Ii,030 3,537 "U,0U0 3,991 1,665 1,31U 2,388 1,653 2,805 2,517 2,786 2,7UO 780 661* 1,0L8 716 1,21*1 1,018 1,267 l,2Ul U.08 3-93 U,0l*0 3,991 2,786 2,710 l,25U 1,21*1 1,251 1,252 n.a. available. 1/ SEC index of 265 common stocks, weekly closing prices, 1939=100; converted to-1957-49=100 ty Federal Reserve. The conversion factor i s 123.91. 2/ Averages of daily trading volume on the New York Stock Exchange. 3/ Moody's 200 common stodcs; end of month figures. hf End of month figures f o r member firms of the New York Stock Exchange which carry margin accounts; excludes balances secured by U. S. Government obligations. 5/ Wednesday figures for weekly reporting member banks. Excludes loans for purchasing or carrying U. S. Government s e c u r i t i e s at banks in New York and Chicago. , Weekly reporting banks account for about 72 per cent of loans to others. Note.--Highs and lows are f o r individual series and may be on d i f f e r e n t dates for d i f f e r e n t s e r i e s . H.lU . Exhibit D Corporate and S t a t e and Local Government S e c u r i t y O f f e r i n g s and Placements (In m i l l i o n s of d o l l a r s ) 195b New c a p i t a l 195k 1956 5k6 U36 1,261 5U7 U26 635 e/kOO e/650 e/375 April May June k9k 903 697 July August September J anuary February March k Corporate I 1955 1 US? e/725 e/975 October November December 1st quarter 2nd q u a r t e r 3rd quarter kth q u a r t e r Year e/2,185 S t a t e and l o c a l I 1955 1 195k 535' 312 538 396 kll #5 497 656 8k2 1*27 350 6kl 73k 7k8 653 583 65k 680 909 335 7k7 k70 2k9 U06 279 261 6k9 1,207 631 921 1,003 290 • 60k 919 #8 U08 59k k23 877 2,213 2,09k 1,917 2,760 9,011+ 1,608 1,995 1,991 1,896 7 ,h90 1,385 l,kl8 1,12k j.,98k 5,911 1,372 2,33k 1,188 1,89k 6,789 ' f/l,k25 Excluding f i n a n c e companies 2 / 1 s t quarter 2nd q u a r t e r 3rd quarter Uth q u a r t e r Year e/1,785 1,791 1,912 i,ai 2,619 7,762 1,527 1,927 1,911 1,792 7,158 e / Estimated. T/ Includes $637-2 m i l l i o n AT&T convertible debenture i s s u e . 2 / Total new c a p i t a l i s s u e s excluding o f f e r i n g s of s a l e s and personal finance companies. Mote.—Details may not add to t o t a l s due to rounding. H.lli Exhibit E Large Public S e c u r i t y Issues f o r New C a p i t a l (Other than U. S. .Treasury) 1 / Proceeds of Large Issues Offered (Millions of d o l l a r s ) Corporate Month 1955 - February . March April May June July August September October November December . 1956 - January February 63 750 173 183 175 101 U05 328 805 221 263 95 212 S t a t e and l o c a l government 107 337 238 152 U03 278 65 23k 716 396 205 192 h33 ' Other 2 / 15 25 50 Large I n d i v i d u a l I s s u e s Offered March.1 through 23 Issuer Type 3 / Coupon Amount (millions Maturity r a t e or O f f e r i n g Rating of yield net i n t e r dollars) e s t cost • CORPORATE Bell Telephone of Pa. | Deb. 35-0 Houston Lighting & Power 1 s t mtg. bds. 30.0 Fruehauf T r a i l e r Co. Conv. sub. deb.. 37.5 P a c i f i c Gas & E l e c t r i c 1st & ref. 25.0 mtg. bds. hhirlpool-Seeger SF deb. 30.0 . 1996 1996 1976 1988 3 1/U 3 1/U h 3 3/8 3.20 3.19. U.oo 3-32 Aa Aa Baa Aa 1980 3 1/2 3-50 A STATE & LOCAL GOVERNMENT San Antonio, Texas Penn Township School D i s t r i c t , Pa. S t . Louis, H i s s o u r i Santa Clara, C a l i f . Denver Colo., School D i s t r i c t #1 G.O. 5.0 1957-76 2.71 1.90-2.75 • Baa L.L. G.O. G.O. 5.3 12.2 5.2 1957-86 1962-75 1957-81 3-31 2.16 2.29 1.95-3.35 1.85-2.25 1.60-2.35 Baa Aa. Aa G.O. 28.5 1957-75 2.27 1.60-2.30 Aa H.lii E-2 Large I n d i v i d u a l Issues Offered.March 1 through 23 (Cont'd) Issuer Type 3 / Coupon Amount Offering Rating (millions Maturity r a t e or net interof yield dollars) est cost STATE & LOCAL GOVERNMENT (Cont'd) Bethlehem Auth., Pa. S t a t e of Alabama S t a t e of New Hampshire S-Ji Diego, C a l i f . Milwaukee, Wisconsin S t a t e of New Mexico Rev. L.L. G.O. Rev. G.O. L.L. 8.0 15.0 19-3 6.0 8.0 5-0 1959-96 1958-75 1957-83 1956-75 1957-76 1957-61 2.81 2.^6 2.25 2.57 2.2k 2.08 2.00-2.82 2.00-2.90 1.60-2.35 1.80-2.60 1.60-2.30 1.65-2.00 A A Aaa Aa Aaa Aaa OTHER None State""and l o c a l government s e c u r i t y o f f e r i n g s of $5 m i l l i o n and over. %!/ Includes f o r e i g n government and I n t e r n a t i o n a l Bank f o r Reconstruction and development issues. 3/ In the case of S t a t e and l o c a l government s e c u r i t i e s , G.O. denotes gene r a l o b l i g a t i o n ; Rev., revenue bonds; G.R., general o b l i g a t i o n s a d d i t i o n a l l y secured by f a c i l i t i e s revenues; L . L . , l i m i t e d l i a b i l i t y o b l i g a t i o n s secured by pledge of designated revenues. e • Exhibit : H.Ik s Forthcoming Large Public S e c u r i t y Offerings f o r New C a p i t a l (Other than U. S. Treasury) 1 / Expected Proceeds from Forthcoming Large Issues • Date of computation - Feb. 28 Mar. 31 Apr. 29 May 31 June 30 J u l y 29 Aug. 31 Sept. 30 Oct. 31 Nov. 30 Dec. 30 - J a n . 31 Feb. 29 During month following date shorn Corporate J S t a t e and other 2 / ' l o c a l govt. '710 211 h2$ 160 67 U07 222 80S 202 215 70 176 123 52h 208 116 339 3hh 100 18U 813 330 20$ 121 327 220 Subsequent t o date s h o w S t a t e and Corporate l o c a l govt. 50 1,393 922 1,11*1 850 830 1,135 920 909 lP-2 230 85 376 233 1,978 2,009 1,917 1,861 1,815 2,018 1,971 2,205 1,650 756 618 917 785 other 2 - —— —* 50 —— Forthcoming Large O f f e r i n g s , as of March .23 Type Amount Approximate date (millions. of o f f e r i n g of d o l l a r s ) CORPORATE New York Telephone -Pennsylvania S a l t Mfg. Tide Water Associated Oil Bank of America . S c o t t Paper F l o r i d a Power and Light l/estcoast Transmission Ltd. Duquesne Light P l a n t a t i o n Pipe Line C a t e r p i l l a r Tractor Columbia Gas Southern C a l i f o r n i a Edison Southern C a l i f o r n i a Gas Sheraton Corporation of America Ref. mtg. bds. SF deb. . • SF deb. Com. stock 55-0 15.0 5o.o 56.0 Conv. deb. 98.7 1 s t mtg. bds. Sub. d e b . ' 1 s t mtg. bds. SF deb. Com. stock Deb. 1st &ref. mtg. bds. Mtg. bds. Deb. 15.0 20.5 20.0 25.0 33-5 1*0.0 Uo.o 1*0.0 15.0 March March March April (rights April (rights April April • April . April April April April May . 1956 27 • 27 29 2 expire) 3 expire) 3 3 h h k 10 17 / H.Ik F-2 Forthcoming Large O f f e r i n g s , as of March 23 (Cont'd) Issuer Type Amount Approximate date (millions of o f f e r i n g of d o l l a r s ) STATE AND LOCAL GOVERNMENT D a l l a s , Texas Washington S t a t e T o l l Bridge Auth. S t a t e of Delaware S t . Louis County, Missouri L o u i s v i l l e , KentuckyAlexandria, Louisiana *Escanaba, Michigan Louisiana S t a t e Building Auth. P h i l a d e l p h i a , Pennsylvania *Oniaha Public Power D i s t . , Neb. Georgia Rural Roads Authority Chesapeake Bay.Ferry Commission F l o r i d a S t a t e Turnpike Auth. Oklahoma Turnpike Authority Pennsylvania Turnpike Commission Washington S t a t e To ll Bridge Auth. S a l t River P r o j e c t , Arizona Inter-American Center Auth., F l a . G.O. Rev. G.O. G.O. G.O. Rev. Rev. L. L. . G.O. Rev, Rev. n.a. Rev. • Rev. Rev. n.a. Rev. 8.5 9.3 10.8 10.7 6.0 8.3 7.0 12.0 12.0 15.0 15.5 20.0 209.0 6£.0 62.0 227.0 11.0 70.0 March 26 March 27 March 27 March 28 March 28 March 29 April U April 5 April 10 April 11 May Spring Summer 1956 1956 1956 1956 1956 None *—Included i n t a b l e f o r f i r s t time. n.a.—Not a v a i l a b l e . 1 / Includes corporate and other i s s u e s of $1$ m i l l i o n and over; S t a t e and local""government i s s u e s of $5 m i l l i o n and over: 2 / Includes f o r e i g n government and I n t e r n a t i o n a l Bank f o r Reconstruction and Development i s s u e s . (0 K.lU Exhibit G Yields on New and Outstanding E l e c t r i c Power Bonds, Rated Aa and A 1 / Date A-rated o f f e r i n g y i e l d s Aa-rated o f f e r i n g y i e l d s Actual I Amount above Actual I Amount above (per cent).[seasoned y i e l d s (per cent) seasoned y i e l d s (basis points) 1(basis p o i n t s ) 1952 average 3.16 13 3-35 12 1953 average 3«h6 16 3-78 26 195U average 3.03 3 3-12 -3 195# average 3.23 9 3.33 12 13 7 8 None *3.23 3»2? 3.31 / 3.35 *3.30 None *3.57 *3.50 3.28 1955 - January February March April May June , July August September October November December 1956 - January February 15 28 ' 29 March 8 16 *3.15 *3-Hi *3.17 None *3.22 *3-20 None None *3.32 *3.25 *3.27 *3.32 10 7 10 7 7 12 None 3.15 3.19 - * — 3 5 9 1U 16 lit 10 " 30 23 -5 None — None — 3-20 3.25 -8 -3 3-25 -3 1 / Covers only 30-year f i r s t mortgage bonds, as r e p o r t e d i n Moody's Bond Survey. Except where i n d i c a t e d , t h e a c t u a l y i e l d f i g u r e and the amount above seasoned y i e l d s are averages of o f f e r i n g s during t h e i n d i c a t e d period and of the d i f f e r e n c e s between t h e s e new o f f e r i n g y i e l d s and y i e l d s on seasoned i s s u e s of s i m i l a r q u a l i t y f o r the same day. The number of new i s s u e s included in the monthly averages v a r i e s from 2 to b except f o r October 195k when 6 A-rated i s s u e s were included. Average m a t u r i t y f o r t h e seasoned i s s u e s v a r i e s from 26 to-28 y e a r s .